September 21, 2010

Railroad Human Resource Issues

Standing Committee on Rail Transportationof the

American Association of State Highway and Transportation Officials

Jacksonville, FloridaSeptember 21, 2010

September 21, 2010 ASSOCIATION OF AMERICAN RAILROADSSLIDE 2

America’s Freight Railroads

Type of MilesRailroad

Class I 7 94,082 164,439 $59.4

Non-Class I 558 45,244 19,640 4.0 Regional 33 16,690 8,044 1.9 Local Linehaul 326 22,058 5,423 1.3 S&T 199 6,496 6,173 0.8

Canadian** 2 561 n/a n/a

Total 567 139,887 184,079 $63.4

*Excludes trackage rights. **Includes CN and CP operations that are not part of a CN- or CP-owned Class I carrier. Source: AAR

The U.S. Freight Railroad Industry: 2008

Number Employees

FreightRevenue

($ billions)Operated*

September 21, 2010 ASSOCIATION OF AMERICAN RAILROADSSLIDE 3

The Rail Industry as of July 2010

Jan-July 2010 carloads 7.3% from 2009, 13.1% from 2008.

Jan-July 2010 intermodal 13.5% from 2009, 6.0% from 2008.

~359,000 freight cars (~23% of total) in storage.

17,000 employees (~10%) since Nov. 2006 peak.

Signs seem to be pointing toward a slow recovery

September 21, 2010 ASSOCIATION OF AMERICAN RAILROADSSLIDE 4

U.S. Freight Railroads and Labor

~184,000 freight rail employees; vast majority are unionized

~$18 billion in annual wages and benefits.

Among nation’s most highly-compensated workers. Average Class I employee in 2008:

Wages: $71,300Benefits: $27,200Total Compensation: $98,500

~$10 billion in retirement benefits to ~600,000 retired railroad workers and family members.

September 21, 2010 ASSOCIATION OF AMERICAN RAILROADSSLIDE 5

$0

$15,000

$30,000

$45,000

$60,000

$75,000

$90,000

$105,000

RRs U.S. Avg.

Benefits

Wages

Freight RR Compensation Is Far Higher Than Average

(U.S. Freight RR Avg. vs. Avg. All U.S. Workers)

Data are 2008. Sources: AAR, Bureau of Economic Analysis

September 21, 2010 ASSOCIATION OF AMERICAN RAILROADSSLIDE 6

050,000

100,000150,000200,000250,000300,000350,000400,000450,000500,000

'80 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09

Class I Railroad Employment

Source: AAR

September 21, 2010 ASSOCIATION OF AMERICAN RAILROADSSLIDE 7

140,000

145,000

150,000

155,000

160,000

165,000

170,000Class I RR Employment: Jan. 2003 - June 2010

Effects of Recession: Lower Rail Employment

Source: Surface Transportation Board

2005 2007 2009 20102003 2004 2006 2008

17,055 (10%)

SLIDE 7

September 21, 2010 ASSOCIATION OF AMERICAN RAILROADSSLIDE 8

Train Crews & Maintenance= 81% of RR Workforce

6,845

58,164

29,071

34,699

13,508

9,619

Other Transportation

Train & Engine (mainlyengineers & conductors)

Maintenance ofEquipment

Maintenance of Way

Professional &Administrative

Executives andManagers

Data are for Class I railroads in 2009. Source: AAR

September 21, 2010 ASSOCIATION OF AMERICAN RAILROADSSLIDE 9

Recruitment and RetentionWill Be a Serious Challenge

0%

10%

20%

30%

40%

50%

<24 25-34 35-44 45-54 55-64 > 65

RR Workers

All Civilian Workers

Age Distribution: RRs vs. All Civilian Employees

Data are for 2007. Source: Railroad Retirement Board, U.S. Census Bureau

At or near retirement age

September 21, 2010 ASSOCIATION OF AMERICAN RAILROADSSLIDE 10

Association of American Railroads www.aar.org